NWC Applauds First SEC Whistleblower Award

Under a new program championed by the National Whistleblowers Center (NWC) to reduce securities fraud, the Securities and Exchange Commission (SEC) today announced its first whistleblower award of nearly $50,000.

The SEC’s announcement is the mark of success for its new Whistleblower Program, which was established one year ago after passage of the Dodd-Frank Act. During the Dodd-Frank rule-making process, the SEC approved a variety of proposals made by the NWC that encourage whistleblowers to step forward.

Specifically, NWC proposed incentives for employees who report wrongdoing internally and rewards for employees whether they choose to file their whistleblower claims with the company or with the government.

Today’s award recognizes the contributions of a whistleblower who wishes to remain anonymous. The whistleblower provided original information leading to over $1 million in sanctions. An official quoted in the SEC press release stated that if the whistleblower had not stepped forward, “it is very likely that many more investors would have been victimized.”

Stephen M. Kohn, Executive Director of the National Whistleblowers Center, made the following statement:

This is a major step forward. The SEC Whistleblower Program is demonstrating that it works quickly and effectively to deter fraud. Whistleblowers are the number one resource for detecting fraud, and every agency can learn from the SEC’s successful Whistleblower Program. Today’s announcement sends a simple message to securities fraudsters: beware. My hat is off to the SEC for protecting investors.

Although this first award is modest, the statute mandates that whistleblowers receive 10-30% of the recovery as a reward. Future awards to whistleblowers will therefore increase as the SEC recoveries increase.

Do you think that the speed and efficiency of the SEC Whistleblower program to issue it’s first award will wake up the IRS to get on the stick. In my opinion the SEC makes the IRS look like fools with their program which takes years to issue an award if any? Maybe the IRS should look at awarding partial awards, as did the SEC in their first award, over the course of many years they claim is necessary by law to finalize their awards.